$110 million acquisition signals AMRI's strategy

Albany Molecular Research Inc. plans to purchase Oso Biopharmaceuticals Manufacturing as the New York company works to position itself as a premier supplier of custom drug development products and services.

AMRI is preparing to pay $110 million in cash to acquire OsoBio, an Albuquerque, New Mexico contract manufacturer of complex injectable drugs. AMRI announced the acquisition Monday.

The acquisition comes as the Albany-based AMRI redefines itself as the patent rights expire on the company's biggest money maker, royalties from developing the active ingredient in the allergy drug Allegra.

"The acquisition of OsoBio is highly complementary to our finished dose manufacturing business, and is consistent with our strategy to be the preeminent supplier of custom and complex drug development services and products to the pharmaceutical industry," said William Marth, AMRI's president and chief executive officer.

The purchase is expected to be financed through cash that AMRI currently has on hand, and the deal is projected to close during the third quarter of this year. OsoBio was expected to generate $58 million to $60 million in revenue in 2014.

Access to that highly specialized operation is fueling the recent boom in drug product contract manufacturing, a $15 billion per year market and one of the fastest-growing pharmaceutical segments.

AMRI is in the midst of a rebound after nearly collapsing during the recession of 2008.

Between 2009 and 2012, the company’s stock fell from $19 a share to near $2, with company officials citing the poor economy, increased global competition and struggle to wean itself from Allegra royalties.

Then, a bond offering in 2013 helped AMRI secure some cash to start purchasing other drug businesses. The company generated $246 million in revenue last year and posted its first profit, $12.7 million, in five years.

At the start of 2014, the company had about $180 million in cash to make a push to stabilize its business model through acquisitions.

OsoBio is expected to continue to operate independently within AMRI’s drug product business unit. Milton Boyer, the current president and chief executive officer, will lead the OsoBio team and report into Steven Hagen, AMRI's senior vice president of manufacturing and pharmaceuticals.

The OsoBio agreement, which is awaiting regulatory approval, comes a little more than two months after AMRI announced a separate deal to buy Cedarburg Pharmaceuticals in Wisconsin for $41 million in cash.

For AMRI, the acquisitions in 2014 are part of an overall plan to consolidate facilities and operations, while searching for its next big money-maker drug.

In April, the drug development company disclosed plans to close its plant in Syracuse and relocate some of the 45 jobs there to other facilities within the company, including the Albany area.

AMRI also plans to outsource some of the Syracuse jobs to its facilities overseas, including in India and the United Kingdom. Company officials have not elaborated on the details.

Still, about 700 of the 1,300 total people employed by AMRI are working in the Albany area.

In the meantime, the company’s stock has been trending upwards recently, though the past 52 weeks have seen some swings — reaching highs of almost $20 a share and lows of $9.

Moves made by AMRI so far this year are also expected to play a key role in its plans for 2015, when the company is expected to open a new operation as part of the $250 million economic development project on the Buffalo Niagara Medical Campus.